Rockwell Automation shares drop 14.4% despite Q4 profit beat

Rockwell Automation (ROK) shares fell 14.4% at 3:59 p.m. ET, from a $443.88 close.

Rockwell Automation (ROK) posted fiscal fourth-quarter adjusted earnings of $3.88 per share, topping the $3.73 consensus estimate, while sales of $2.33 billion fell below the $2.43 billion estimate. Fourth-quarter sales rose 1% from a year earlier. Organic sales grew 3%, but a customer tariff refund program reduced both reported and organic sales by about 4 percentage points.

The company also introduced guidance for fiscal 2027.

Here's how the company did:

• Adjusted EPS: $3.88 vs. $3.34 a year earlier, $3.73 consensus
• Diluted EPS: $3.11 vs. $1.23 a year earlier
• Revenue: $2.33 billion vs. $2.32 billion a year earlier, $2.43 billion consensus

The company received $103 million of International Emergency Economic Powers Act tariff refunds in the quarter, plus $5 million of related interest. Those items, net of an $85 million accrual for customer refunds that reduced sales, added $0.11 per share to both diluted and adjusted EPS.

Fiscal 2027 guidance

For fiscal 2027, the company expects reported sales growth of 4.5% to 7.5% and organic sales growth of 6% to 9%. It expects diluted EPS of $13.78 to $14.78 and adjusted EPS of $14.50 to $15.50.

Fiscal 2026 adjusted EPS came in at $13.42, above the $13.00 to $13.30 range the company gave in August.

Chairman and CEO Blake Moret said, "We are committed to growing customer value, increasing market share, and expanding margins."

Segment results

Intelligent Devices fourth-quarter sales rose 5% to $1,144 million, and segment operating margin reached 21.6%.

Software & Control sales rose 15% to $754 million, and segment operating margin reached 34.0%.

Lifecycle Services sales fell 9% to $519 million. Organic sales rose 2%, while divestitures reduced sales by 11%.

Cash and capital returns

Cash provided by operating activities was $680 million in the fourth quarter, compared with $454 million a year earlier. Free cash flow was $602 million, compared with $405 million, and included $108 million of tariff refunds and related interest income.

For the full fiscal year, free cash flow was $1,701 million, up 25%.

The company repurchased about 1.2 million shares for $500 million in the quarter. It had $673 million remaining under its existing repurchase authorization at September 30.

Net income has risen in each of the last three quarters, from $138.0 million in the fourth quarter of fiscal 2025 to $408.0 million in the third quarter of fiscal 2026.